2 Invested capital

Consolidated Financial Statements 2 Invested capital

2.1 Net operating assets and operating free cash flow

Among others, Bystronic uses the key figures “Net operating assets”, “Return on net operating assets (RONOA)” and “Operating free cash flow” to manage its operating performance.

Net operating assets and return on net operating assets

CHF million	12/31/2022	12/31/2021

Trade receivables	167.2	133.7
Prepayments to suppliers	6.0	6.5
Other receivables (without derivatives)	33.9	35.9
Inventories	287.7	249.1
Prepaid expenses and accrued income	14.0	14.1
Fixed assets	134.2	133.1
Intangible assets	11.0	11.4
Long-term receivables and loans	24.2	22.8
Deferred tax assets	24.2	22.8
Trade payables	–69.9	–79.5
Advance payments from customers	–158.7	–153.4
Other liabilities (without derivatives)	–31.5	–27.3
Accrued expenses and deferred income	–83.7	–80.3
Short-term and long-term provisions	–50.4	–48.2
Deferred tax liabilities	–20.3	–21.7
Net operating assets (NOA)	288.0	218.9

Net operating assets (NOA), average	253.4	225.1
Operating result (EBIT)	48.1	70.1
Effective tax rate	20.3%	18.0%
Return on net operating assets (RONOA) after tax	15.1%	25.5%

For the calculation of the net operating assets (NOA) at the end of 2022, effects from the disposals of discontinued operations are not taken into account. Therefore, in the calculation of the NOA, financial assets (non-current receivables and loans) are reduced by CHF 62.5 million (previous year: CHF 60.8 million). In the prior year, other receivables (excluding derivatives) were additionally reduced by CHF 20.0 million. The interest on the vendor loan of CHF 1.7 million (previous year: CHF 0.8 million) is also not taken into account when calculating the allowable tax expense or the effective tax rate.

Return on net operating assets (RONOA) after tax is calculated from the operating profit (EBIT) after deduction of the chargeable tax expense in relation to the average net operating assets between January 1^st and the relevant balance sheet date.

Operating free cash flow


Cash flow from operating activities	–16.5	92.1
Investment in fixed assets	–18.3	–25.4
Divestment of fixed assets	0.2	3.7
Investment in intangible assets	–5.1	–3.4
Investment in financial assets and securities	–1.3	–2.7
Divestment of financial assets and securities	0.4	0.5
Operating free cash flow	–40.6	64.8
in % of net sales	–4.0%	6.9%

Acquisition of business activities		0.7
Sale of business activities	19.1	320.3
Purchase of marketable securities	–125.0	–30.0
Sale of marketable securities	30.0
Free cash flow	–116.4	355.8

Operating free cash flow is calculated on the basis of cash flows from operating activities less selected items of cash flows from investment activities. Compared to free cash flow, operating free cash flow excludes changes in marketable securities and money market instruments with a maturity of more than 90 days as well as the acquisition and divestment of business activities.

2.2 Net working capital

Trade receivables

CHF million	12/31/2022	12/31/2021

Gross values	176.7	141.4
Value adjustments	–9.5	–7.8
Net values	167.2	133.7

Specific and general value adjustments were recognized for receivables at risk. The general value adjustment is based on empirical values.

Other receivables

Other receivables mainly include recoverable value-added taxes, other tax refund claims and the positive market values of open derivative financial instruments as of the balance sheet date. The decrease compared to the prior year is primarily due to the settlement of the receivable of CHF 20.0 million from Recticel in connection with the sale of FoamPartner.

Inventories

CHF million	12/31/2022	12/31/2021

Raw materials, supplies and spare parts	145.4	132.1
Semi-finished goods and work in progress	45.2	40.2
Finished goods	148.2	123.2
Value adjustment on inventories	–51.2	–46.3
Total inventories	287.7	249.1

The categorization of inventories was adapted to Bystronic's requirements in the reporting year and the corresponding previous year's figures are shown identically. Due in particular to delayed machine acceptances, inventories increased by CHF 38.6 million.

Advance payments from customers

After placing their orders, customers make corresponding advance payments. Due to delayed machine acceptances, advance payments increased although order intake declined.

Other short-term liabilities

The position includes taxes owed, social security contributions and negative market values of open derivative financial instruments as of the balance sheet date.

Accrued expenses and deferred income

CHF million	12/31/2022	12/31/2021

Accruals for personnel expenses	20.6	24.0
Deferred income	20.7	21.6
Accruals and deferrals for current income taxes	19.5	14.0
Other accruals and deferrals	22.9	20.7
Total accrued expenses and deferred income	83.7	80.3

Accrued expenses and deferred income include amounts from the accrual of expenses and deferred income. Other accruals and deferrals include commissions, volume discounts, installation and service costs as well as goods and services purchased from third parties but not yet invoiced.

Significant estimates made by management

In assessing the recoverability of inventories, estimates are made on the basis of expected consumption, price trends (lower of cost or market principle) and loss-free valuation. The estimates used to determine value adjustments on inventories are reviewed annually and amended as necessary.

Accounting principles

Trade and other receivables are stated at nominal value, less value adjustments for doubtful accounts.

Inventories are valued at the lower of cost or market. Production costs are calculated without imputed interest. Risks arising in connection with inventories difficult to sell or with a long storage period are accounted for by means of value adjustments.

Liabilities are recognized in the balance sheet at nominal value.

2.3 Fixed assets

CHF million	Factory buildings	Plant and machinery	Tooling, furniture, vehicles	Assets under construc- tion	Undevelo- ped real estate	Total fixed assets

Cost at 12/31/2020	107.6	89.4	27.5	8.1	9.2	241.9

Additions	0.7	12.8	3.3	8.5		25.4
Disposals	–1.5	–8.8	–1.2		–1.2	–12.7
Changes in scope of consolidation	0.2		0.2	0.1		0.4
Reclassifications	0.5	0.4	0.1	–0.6		0.4
Currency translation effects	0.4	–0.4	–0.3	–0.5	0.2	–0.6
Cost at 12/31/2021	107.9	93.5	29.6	15.6	8.2	254.7

Additions	2.7	10.0	3.3	2.2		18.1
Disposals		–3.1	–1.3	–0.1		–4.6
Changes in scope of consolidation		–0.0	–0.1	–0.0		–0.2
Reclassifications	10.0	3.3	1.2	–14.5
Currency translation effects	–1.6	–1.8	–1.0	–0.4	0.1	–4.7
Cost at 12/31/2022	119.0	101.9	31.6	2.7	8.3	263.4


Accumulated depreciation at 12/31/2020	40.3	60.2	19.3			119.8

Ordinary depreciation	3.5	5.7	3.8			13.0
Impairments		0.3	0.0			0.3
Disposals	–0.9	–8.6	–1.2			–10.7
Changes in scope of consolidation	0.1		0.0			0.1
Currency translation effects	–0.2	–0.6	–0.2			–1.0
Accumulated depreciation at 12/31/2021	42.8	57.1	21.8			121.6

Ordinary depreciation	3.4	7.0	3.8			14.2
Impairments		0.3	0.1			0.4
Disposals		–3.1	–1.4			–4.5
Changes in scope of consolidation		–0.0	–0.1			–0.2
Currency translation effects	–0.6	–1.0	–0.7			–2.3
Accumulated depreciation at 12/31/2022	45.5	60.2	23.5			129.3

Net book value of fixed assets at 12/31/2021	65.1	36.4	7.8	15.6	8.2	133.1

Net book value of fixed assets at 12/31/2022	73.5	41.6	8.1	2.7	8.3	134.2

Additions to fixed assets in 2022 mainly relate to investments in operating facilities at the production sites in Niederönz (Switzerland) and Gotha (Germany), investments in factory buildings in Tianjin (China) and in the Experience Center in Incheon (Korea).

Significant estimates made by management

The recoverability of fixed assets is assessed when there are indications of impairment. If there are indications of impairment, the recoverable amount is calculated. If the carrying amount of an asset exceeds its recoverable amount, an additional value adjustment is recognized. The calculation of the recoverable amount includes the estimation of future cash flows, the determination of the discount factor and the growth rate based on forecasted expectations. Actual cash flows may differ from the discounted future cash flows based on these estimates. Likewise, useful lives may be shortened or values may decline as a result of changes in use due to the relocation or abandonment of sites or if sales are lower than expected in the medium term.

Accounting principles

Land is carried at acquisition cost less any value adjustments. Other fixed assets are valued at acquisition or production cost less any necessary depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:



Factory buildings	30 to 40 years
Plant and machinery	5 to 12 years
Tooling, furniture and vehicles	2 to 8 years
IT hardware and office machinery	3 to 5 years

2.4 Intangible assets

CHF million	2022	2021

Cost at 1/1	43.8	40.9
Additions	5.3	3.4
Disposals	–6.2	–0.5
Changes in scope of consolidation
Currency translation effects	–0.3	–0.0
Cost at 12/31	42.7	43.8


Accumulated depreciation at 1/1	32.5	27.9
Ordinary depreciation	5.8	5.1
Impairments
Disposals	–6.2	–0.5
Changes in scope of consolidation
Currency translation effects	–0.3	–0.0
Accumulated depreciation at 12/31	31.7	32.5

Net book value of intangible assets at 1/1	11.4	13.0

Net book value of intangible assets at 12/31	11.0	11.4

Intangible assets mainly include software. The additions basically relate to investments in the digitalization and automation of business processes.

Goodwill

Theoretical capitalization of goodwill would result in the following effects on the consolidated financial statements:

Theoretical assets analysis of goodwill:

CHF million	2022	2021

Cost at 1/1	90.8	88.1
Increase from acquisitions		0.5
Decrease from divestments and liquidations
Currency translation effects	–5.4	2.2
Cost at 12/31	85.4	90.8


Accumulated depreciation at 1/1	81.6	66.8
Ordinary depreciation	6.1	12.5
Decrease from divestments and liquidations
Currency translation effects	–5.1	2.3
Accumulated depreciation at 12/31	82.6	81.6

Net book value of goodwill at 1/1	9.2	21.3

Net book value of goodwill at 12/31	2.8	9.2

The additions are related to the acquisition of Kurago Software S.L.U (Spain) (see note 4.2).

Theoretical impact on income statement:

CHF million	2022	2021

Operating result (EBIT)	48.1	70.1
EBIT margin in %	4.7%	7.5%
Amortization of goodwill	–6.1	–12.5
Theoretical operating result (EBIT) incl. amortization of goodwill	42.0	57.6
Theoretical EBIT margin in %	4.1%	6.1%

Net result	36.6	56.8
Amortization of goodwill	–6.1	–12.5
Theoretical net result incl. amortization of goodwill	30.5	44.3

Theoretical impact on balance sheet:

CHF million	12/31/2022	12/31/2021

Equity as per balance sheet	724.2	815.2
Theoretical activation of net book value of goodwill	2.8	9.2
Theoretical equity incl. net book value of goodwill	727.0	824.4

Shareholders’ equity in % of total assets	63.4%	66.0%
Theoretical equity incl. net book value of goodwill in % of total assets	63.5%	66.3%

Significant estimates made by management

The recoverability of intangible assets (including goodwill) is assessed when there are indications of impairment. If there are indications of impairment, the recoverable amount is calculated. If the carrying amount of an asset or the cash-generating unit to which the asset belongs exceeds its recoverable amount, an additional impairment loss is recognized. The calculation of the recoverable amount includes the estimation of future cash flows, the determination of the discount factor and the growth rate based on forecasted expectations. Actual cash flows may differ from the discounted future cash flows based on these estimates.

Accounting principles

Intangible assets are carried at acquisition cost less any value adjustments. Amortization is calculated on a straight-line basis over the estimated useful lives of the assets, which is normally between three and five years for software.

Research and development costs are reflected in the income statement.

Goodwill resulting from acquisitions of control is offset against retained earnings at the time of acquisition. On disposal or liquidation of a business unit, the goodwill previously offset against equity is reflected in the income statement. For shadow accounting purposes, goodwill is generally amortized on a straight-line basis over its useful life, which is normally five years.

2.5 Other financial assets

CHF million	12/31/2022	12/31/2021

Assets from employer contribution reserves	20.4	21.7
Long-term receivables and loans	86.8	83.6
Securities held as non-current assets	3.4	3.9
Total financial assets	110.6	109.2

Further details on the change in assets from employer contribution reserves can be found in note 5.1. Non-current receivables and loans include long-term repayment contracts with customers, deposits for rents and the granting of a vendor loan (including accrued interest) of CHF 62.5 million (previous year: CHF 60.8 million) in connection with the sale of Mammut Sports Group. Financial assets are value adjusted by CHF 3.7 million (previous year: CHF 2.3 million).

Accounting principles

Financial assets are recorded at acquisition cost, less any value adjustments.

2.6 Provisions and contingent liabilities

CHF million	Warranty	Litigation	Other	Total provisions

Provisions at 12/31/2020	24.3	4.1	11.7	40.2
Additions	25.4	2.7	8.5	36.6
Use	–18.0	–0.0	–0.8	–18.8
Release	–8.0	–2.2	–0.7	–10.9
Changes in scope of consolidation			1.8	1.8
Currency translation effects	–0.2		–0.4	–0.6
Provisions at 12/31/2021	23.5	4.6	20.1	48.2

Additions	27.0	0.1	2.1	29.2
Use	–18.7	–0.0	–0.7	–19.5
Release	–3.9	–1.8	–0.4	–6.2
Changes in scope of consolidation	–0.0			–0.0
Currency translation effects	–0.9	–0.0	–0.4	–1.3
Provisions at 12/31/2022	26.9	2.8	20.6	50.4

of which short-term 2021	18.8	0.3	5.5	24.6
of which short-term 2022	22.4	0.0	5.9	28.3

Warranty provisions relate to the sale of products and are based on empirical values. Experience shows that the corresponding cash outflow occurs evenly over the warranty period of one to five years.

Provisions for litigations mainly relate to legal cases arising from intellectual property rights and potential guarantees and indemnities in connection with the sale of discontinued operations, where the timing of the cash outflow of the liabilities is uncertain as it depends on the progress of the negotiations or proceedings.

Other provisions include in particular provisions for long-service awards and retirement benefits that do not qualify as employee benefit obligations, provisions for impending losses on purchase commitments under master purchase agreements and provisions for environmental and tax liabilities.

Contingent liabilities

In connection with customer financing, there were repurchase obligations for machines to leasing companies in the amount of CHF 31.2 million (previous year: CHF 36.7 million). Bystronic companies guarantee the beneficiary leasing companies to take back machines in the above-mentioned amount if their lessees fail to pay the agreed installments.

Significant estimates made by management

The amount of provisions is primarily determined by the estimate of future costs. The calculation for warranty claims is based on sales of products, contractual agreements and empirical values. In addition to the lump-sum calculation, individual provisions are taken into account for claims that have occurred or have been reported based on the management’s assessment.

Accounting principles

Provisions are recognized when an event has occurred prior to the balance sheet date that gives rise to a probable obligation where the amount and/or timing is uncertain but estimable. This obligation may be based on legal or factual grounds.